The Game Of Tricking Growth

Fast, a firm that offers online checkout and identity services, has raised $102 million in a Series B round back in March 2021. Stripe, the online payments behemoth, led this fundraising round. It also led Fast's $20 million Series A in 2020. To date, Fast has raised $124 million.

  • The company announced that the gross merchandise volume processed by its checkout service more than tripled each month and expected this trend to continue
  • Fast is not alone in its field of fast growing FinTech companies commanding excessive valuations, in January 2021 Checkout.com raised $450 million at a $15 billion valuation while Rapyd, another competitor, announced a $300 million raise at a $2.5 billion valuation one day later

One Year Later

Some reports indicate that Fast was now trying to raise additional capital at a valuation of $1 billion. However, this doesn't seem to be happening as, despite all the hype surrounding its launch, the 3-year old startup only generated $600,000 in sales last year.

"Morris reports that Fast, backed by Stripe [...] generated revenues of around $600,000 last year. That’s thin, given that the company’s last funding round was worth $102 million in January 2021." by Alex Wilhelm for TechCrunch

In short, Fast was trying to get a valuation of $ 1 billion on top of $ 600,000 in sales.

It now appears that Fast is looking to lay-off hundreds of employees in order to stay afloat. A significant change in narrative from 2020 where Fast signalled that the adoption of its core product had far exceeded its own projections and some sources reported that any fundraising deal would be "opportunistic".

"Fast spokesperson, Jason Alderman, tells The Information that adoption of its core product Fast Checkout “has far exceeded” its “ambitious projections"

"According to The Information, sources say the deal is “opportunistic” – i.e. the additional capital is not necessary, but venture capital conditions are ripe for such figures." by for FinTech Futures

BENCHMARK'S TAKE

  • GoPuff, the instant delivery startup which eyed a $40 billion valuation, Gorillas, another delivery startups and countless FinTech companies should remind investors that hype should not be preceded by metrics
  • Going forward, we still expect venture capital to offer promising returns to investors who manage to have access to a large selection of deals, be able to cherry pick the ones they fund and resist the fast-vanishing hype around certain sectors

Disclaimer

Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products.

Credits

Photo by Fast.